Tens of thousands of delegates from almost 200 countries have gathered at the coastal capital of Azerbaijan, Baku, for COP29, the UN’s annual two-week climate summit. But noticeably absent among them are the world’s finance leaders.
Bosses at Lloyds, HSBC, Bank of America, BlackRock, Deutsche Bank and Standard Chartered all opted out. With this year hyped as the ‘finance COP’, designed to galvanise financial support for climate action, their no-show is a clear indication that climate measures are a fading priority.
In previous years, finance leaders have played a key role in progressing climate talks. There were record levels of attendance at COP28 in Dubai last year. Similarly, COP26 in Glasgow was hailed as a critical milestone as major banks, asset managers and insurers came to the table in a sign that big business was finally rolling up its sleeves and taking the climate crisis seriously.
But this year, things seem different. Enthusiasm has fizzled out and some have cited logistical challenges and a lack of business opportunities as reasons for skipping the summit. As one finance executive told the Financial Times: “You only go to the party if everyone is going.”
The size and complexity of COP may be discouraging people. Last year’s event attracted 83,000 attendees, and the site was so large that delegates had to be ferried around in golf buggies. UN climate chief Simon Stiell has even criticised its scale.
You only go to the party if everyone is going
Bad timing is also to blame. Held just after the US election, many finance leaders are hesitant to commit time and attention to the event given Donald Trump’s intention to once again withdraw from climate agreements.
Whatever the reason, a gaping finance-shaped hole at COP29 raises concerns about the future of climate finance. Some of the proposals coming out of the event, such as the new carbon market rules, could be a disaster if implemented without the buy-in of key financial players. But this is not the first sign that the finance industry is pulling back on climate commitments and it likely won’t be the last.
Finance leaders are abandoning climate commitments
There’s been a flurry of back-peddling on climate commitments among finance leaders of late. BlackRock has abandoned the majority of its climate measures in the past twelve months. The asset manager supported just 20 of the 493 environmental and social proposals put forward by shareholders at annual meetings. This marks a considerable drop from 2021, when it backed nearly half. BlackRock has since defended the move, arguing that the proposals were “overly prescriptive and “lacking economic merit”. And yet, it is a sign that attitudes are clearly shifting.
The banking sector’s own struggle with climate commitments was highlighted last month when HSBC dropped its chief sustainability officer from its re-organised executive board. Morgan Stanley has also lowered its expectations for cutting emissions from its corporate lending portfolio.
Meanwhile, several high-profile banks, including HSBC and Standard Chartered, have this year exited the process of seeking Science Based Targets initiative (SBTi) validation due to strict limitations on fossil-fuel financing.
The Net Zero Insurance Alliance (NZIA), a UN-backed body that commits insurers to reducing emissions tied to their underwriting, disbanded, after key members, including Lloyd’s of London, Allianz, Axa and Vanguard, left. A new group, the Forum for Insurance Transition to Net Zero, has since taken its place.
Ongoing market volatility may be what is pushing many finance players to prioritise short-term financial goals over longer-term climate investments, but it nonetheless signals a clear retreat.
